Tuesday, 26 of September of 2017

Economics. Explained.  

Consumer Confidence

August 29, 2017

The Conference Board reported that consumer confidence rose 2.9 points in August to 122.9 after having climbed by 2.7 points in July.  The March level of 124.9 was a 17-year high (December 2000).

Lynn Franco, Director of Economic Indicators at the Conference Board said ““Consumer confidence increased in August following a moderate improvement in July.  Consumers’ more buoyant assessment of present-day conditions was the primary driver of the boost in confidence, with the Present Situation Index continuing to hover at a 16-year high (July 2001, 151.3).  Consumers’ short-term expectations were relatively flat, though still optimistic, suggesting that they do not anticipate an acceleration in the pace of economic activity in the months ahead.”

Confidence data reported by the Conference Board are roughly matched by the University of Michigan’s series on consumer sentiment.   As shown in the chart below, trends in the two series are identical but there can be month-to-month deviations.   Any way you slice it, confidence remains at levels not seen in more than a decade.

The consumer should continue to provide support for overall GDP growth in 2017.  The stock market is near a record high level.  Home prices continue to climb.  Consumer net worth is at a record high level and rising.  Jobs are rising by about 170 thousand per month.  The unemployment rate is falling slowly. The consumer has little debt.  Interest rates remain low.  In addition, consumers are likely to get a cut in income tax rates in 2018.  Clearly, the consumer’s optimism is valid..

We anticipate GDP growth of 2.5% in 2017 and 2.8% in 2018.

Stephen Slifer

NumberNomics

Charleston, SC


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